Florida Tort Reform 2023

Florida Governor DeSantis signed House Bill 837 into law, referred to by some as the “legal system abuse reform legislation,” bringing about long awaited relief to the insurance industry from predatory litigation that has fueled rising insurance prices.  The new law, made effective immediately:

(1) Reduces from four years to two years a statute of limitations for filing negligence lawsuits.

(2)  Largely eliminates “one-way attorney” fees that compels insurers to pay the costs of plaintiffs’ attorney fees.  The bill includes a narrow exception that would allow one-way attorney fees in an action brought for declaratory relief (a “declaratory judgment action”) filed after total coverage denial of a claim.

(3)  The right for declaratory relief against an insurer may not be transferred to, assigned to, or acquired in any other manner by anyone other than a named insured, omnibus insured or a named beneficiary.

(4)  Modernize Florida’s bad faith law, including a bar on a claim of bad faith if the insurer tenders the policy limit or the amount demanded within 90 days after receipt of actual notice of a claim and sufficient evidence to support the amount of the claim.  Mere negligence alone is insufficient to constitute bad faith.  The insured, claimant, and representative of the insured or claimant have a duty to act in good faith in furnishing information regarding the claim, in making demands of the insurer, in setting deadlines, and in attempting to settle the claim.

(5)  Protects small businesses from paying exorbitant damages.  It helps shield owners of property such as apartment complexes from premises-liability lawsuits if people are injured in crimes. Judges and juries would consider the fault of “all persons” — including the criminals — in determining liability. 

(6)  Amends “comparative negligence law” so defendants have to be at least 51 percent at fault before they could be forced to pay damages.

Attorney fees have been particularly burdensome on insurers and unnecessary as injured persons are bombarded by television ads, radio ads and billboards to “call an attorney first. Do not call your insurance.”   Independent from this culture fostering a ”litigation lottery” mindset, it introduces attorney fees into the financial impact of claims before the insurance company has the opportunity to offer to pay the claim.  This law change has been vigorously opposed by the plaintiff trial attorneys who claim this will harm consumers.  One plaintiff law firm reputedly bragged they filed 25,000 lawsuits in anticipation of the new law, with the plaintiffs’ bar expected to have flooded the courts with filing as many as 100,000 new law suits in advance of the new law. 

While the new law shields businesses and insurance companies from some lawsuits, it does not shield them from legitimate covered claims and does not shield insurers from liability for abusive claims handling or bad faith.  Supporters of the law expect this law will rein in “billboard lawyers” (large mills of litigation designed to generate legal fees rather than fairness or justice).

While the Florida legislature previously called to heel the abusive assignment of benefits (AOB) practices causing the cost of roof repairs from hurricanes and violent storms to be inflated, the other key AOB problem for the insurance industry, auto glass repair claims, has remained as an unresolved abuse that should now be remedied.

It has not only been the small but prolific portion of the plaintiff’s bar that abusively inflated insurance payouts, some in the medical profession have been a factor as well.  Under this tort-reform, plaintiffs must disclose when their doctors have agreed to take a share of any judgment.  There have been an unhealthy number of instances where the health care provider has secured an economic interest in the outcome of the injury claim, and it is believed that unnecessary and inflated treatment and the concurrent medical expenses followed.  It is hoped that the disclosure of the physicians financial interest and motivation should have a chilling effect on evidence of treatment and medical expenses.   

APCIA’s Logan McFaddin stated that “the reforms enacted will help restore fairness to Florida’s legal system, reduce the excessive number of frivolous lawsuits being filed, and ultimately help benefit consumers by increasing the availability and affordability of insurance over time.”